4 AI Stocks Transforming the Future

Four TSX stocks are the top prospects if you expect to ride and make money on the anticipated AI boom in 2024.

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Artificial intelligence (AI) is present, if not pervasive, everywhere, such that people expect AI stocks to boom further next year. Investors can make money from Open Text (TSX:OTEX), CGI Inc. (TSX:GIB.A), Descartes Systems Group (TSX:DSG), or Kinaxis (TSX:KXS) as they transform the future.

Next-gen AI innovation

Rapidly rising interest rates have stifled many growth-oriented companies, although some have executed and performed better than others. Open Text delivered record results despite a volatile world. The $14.9 billion company helps organizations manage large data platforms.  

In Q1 fiscal 2024, total revenues and annual recurring revenues (ARR) increased 67.3% and 59.1% to US$1.4 billion and US$1.1 billion, respectively, versus Q1 fiscal 2023. Notably, Open Text’s net income reached US$80.9 million compared to the US$116.9 million net loss a year ago.

Its CEO and CTO, Mark J. Barrenechea, said the strong Q1 results are a foundation for a strong fiscal 2024. He adds that OpenText Aviator would be at the forefront of the next generation of AI innovation. At $54.94 per share, current investors enjoy a +40.24% year-to-date gain on top of the 2.47% dividend.

Strong partner base and expanding clientele

CGI is a winning investment in 2023, like Open Text. The $32.3 billion company provides information technology and business process services and is one of the top federal contractors in the United States. If you invest today, the share price is $138.96 (+19.06% year-to-date).

The Canadian firm partners with clients globally and delivers advanced cybersecurity services to secure their businesses for the future. Besides joining the Microsoft Intelligent Security Association, the company secured a five-year contract from the U.S. Strategic Command (USSTRATCOM). CGI has a bright business outlook due to a strong partner base and expanding clientele.

Thriving business

Descartes thrives with its focus on logistics-intensive businesses in commerce. The $9.5 billion company takes pride in its Logistics Technology platform, including the e-commerce warehouse management system (WMS). At $111.14 per share, the AI stock is up 17.8 % year to date.

In the first half of fiscal 2024, revenue and net income rose 17% and 25% year over year to $280 million and $57.5 million, respectively. According to Descartes CEO Edward J. Ryan, the Global Logistics Network (GLN) is valuable to shippers, carriers, and logistics service providers in meeting logistics and supply chain operations challenges.

Ryan adds investing in GLN’s technologies will power logistics and supply chains into the future.

Supply chain excellence

Kinaxis is a dark horse with solid growth potential. The $4.4 billion company provides supply chain management solutions. Because of the strong Software-as-a-Solution (Saas) revenue growth in Q3 2023, profit jumped 354% to US$7.4 million versus Q3 2022. Total revenue grew 21% year over year to US$108 million.

Its President and CEO, John Sicard, said Kinaxis is transforming supply chains from cost to profit centers. The focus is to grow revenue, cash flow, and return on investment for small, medium and large enterprises. Market analysts’ 12-month average price target is $216.39, a 39.9% potential rise from $154.65.

Real AI companies

Nearly everyone, especially companies wishing to attract investors, are riding on the AI wave. Some even claim to have life-altering technology. However, the four companies in focus boast legitimate AI applications and capabilities. You can invest in one or all, but not the pretenders.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends CGI, Descartes Systems Group, Kinaxis, and Microsoft. The Motley Fool has a disclosure policy.

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